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Massachusetts health care — wonky, with a healthy dose of reality

Trump's Call to Repeal ACA But Not Pre-Existing Conditions Protections Won't Work: Because of Massachusetts

Trump's Call to Repeal ACA But Not Pre-Existing Conditions Protections Won't Work: Because of Massachusetts

November 18, 2016

While deciphering exactly where the Trump administration wants to go with the Affordable Care Act is difficult, reports have suggested that the new administration will seek to repeal almost all, but not every single provision all of the Obamacare law. The parts he would keep are the most politically attractive components - allowing adult children to stay on their parents' family coverage to age 26, and the core insurance protections - excluding coverage or charging higher premiums for people with pre-existing conditions.

Would it work to keep the insurance protections, but repeal the individual mandate - the requirement to purchase coverage, and to repeal the sliding scale premium assistance subsidies?

The lesson from Massachusetts is a clear no. We tried that here during the late 1990s and early 200s, and the result was premiums going up and up. The policy results in adverse selection, when healthier people avoid getting coverage, since they can sign up when they get sick. This increases premiums as the pool of those buying insurance are relatively sicker and costlier. This leads more healthy people to drop more expensive coverage, causing what's called a death spiral in the insurance market.

This dynamic led then-Governor Romney to propose his plan, combining insurance protections, the mandate, and subsidies.

It's all explained well in a court brief. As part of court case challenging ObamaCare, a bipartisan group of 49 distinguished economists submitted a brief in support of the ACA. The brief defends the ACA as relying on all three components. They explain how the pre-Romney Massachusetts experience with insurance protections failed:

The tumultuous experience in Massachusetts documents why all three legs are necessary to make broad coverage affordable and stable. The state first tried to reform the health insurance market in 1996. The legislature passed guaranteed issue and community rating laws that prohibited insurers from discriminating in the issuance of insurance on the basis of health status or other factors, prohibited insurers from varying premium rates based on health status, and restricted the amount by which insurers might vary rates based on characteristics such as age or sex. Following these reforms, average  premiums for individual coverage reached $8,537 per year, the most expensive in the nation by a wide margin. Those premiums fell only after Massachusetts implemented a second wave of reforms that included both an individual mandate and premium subsidies for low-income individuals. With the combination of those reforms, premiums for individual coverage in Massachusetts dropped by 35% compared to the national average between 2006 and 2009.

This process is also clearly explained in a charming set of cartoons, in the online news site, Vox. Click below to check it out:

                                                                                        -- Brian Rosman